How are benefits determined under Budget's defined benefit pension plans?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
We sponsor defined benefit pension plans in the United States and in certain foreign subsidiaries with some plans offering participation in the plans at the employees' option. Under these plans, benefits are based on an employee's years of credited service and a percentage of final average compensation. However, the majority of the plans are closed to new employees and participants are no longer accruing
The funded status of the defined benefit pension plans is recognized on the Consolidated Balance Sheets and the gains or losses and prior service costs or credits that arise during the period, but are not recognized as components of net periodic benefit cost, are recognized as a component of accumulated other comprehensive income (loss), net of tax.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 79)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the company sponsors defined benefit pension plans in the United States and certain foreign subsidiaries. Some plans offer participation at the employees' option. Under these plans, benefits are determined based on an employee's years of credited service and a percentage of their final average compensation.
However, the majority of Budget's defined benefit pension plans are closed to new employees, meaning that new employees are not able to accrue additional benefits under these plans. The funded status of these plans is recognized on the Consolidated Balance Sheets. Any gains, losses, prior service costs, or credits that arise during the period, but are not recognized as components of net periodic benefit cost, are recognized as a component of accumulated other comprehensive income (loss), net of tax.
For prospective Budget franchisees, this information is relevant in understanding the overall financial health and employee benefit strategies of the company. While franchisees themselves are not direct participants in these pension plans, the obligations and management of these plans by Budget can impact the company's financial stability and strategic decisions. Understanding the assumptions and investment strategies used for these pension plans can provide insight into Budget's long-term financial planning and risk management practices.